On Thursday, President Donald Trump signed a bill that repealed an Internal Revenue Service rule that would have burdened people who report taxes on digital assets. This action comes as a big relief to the cryptocurrency space. The overturned rule would’ve brought the prior reporting requirements on brokers to DeFi exchanges. It was first reissued in December 2024. This action, executed through the Congressional Review Act in March 2025, marks a significant shift in the regulatory landscape for digital assets.
It was the product of a bipartisan Infrastructure Investment and Jobs Act passed back in 2021. Its primary focus was to improve tax compliance in the emerging digital asset space. Brokers are newly required to issue tax forms to the IRS and digital asset owners. This new provision closely resembles the deposition and discovery requirements found in other, more mature financial markets.
Yet the revised rule, which sought to clarify its application to DeFi exchanges, brought out significant backlash from the burgeoning crypto industry. As an initial matter, industry participants made the point that DeFi platforms, because they are decentralized, do not operate as traditional intermediaries. They emphasized that these exchanges often lack access to user data, rendering compliance with the IRS's reporting mandates practically unachievable.
The crypto industry raised a huge outcry that DeFi exchanges aren’t intermediaries, and they don’t have user data. Without user data, it is not feasible to meet IRS reporting requirements.
It was the Congressional Review Act that allowed for the rule’s reversal. In this case, it was the full House of Representatives and Senate voting in March 2025 to repeal the IRS rule. Though the regulation was already in limbo, President Trump’s signature finalized the repeal on Thursday, officially killing the regulation.
The first substantial change to this IRS rule came under the Biden administration. It was met with immediate outcry from the crypto industry, which did not believe the requirements were feasible for DeFi platforms. The industry claimed that the rule’s requirements were not feasible given the decentralized and sometimes anonymous nature of DeFi activities.
The scuttled IRS rule was part of a larger effort to wrangle the rapidly growing cryptocurrency sector. It was an important signal of the government’s desire to bring digital assets into the current financial regulatory fold. The rule’s reversal is regarded as a victory for the crypto industry.
The crypto industry has NOT been uniformly in favor of a binary decision to ban or allow crypto to go unregulated. Rather, they continued to call for the development of regulations that recognize the unique characteristics of DeFi and other blockchain-based technologies. The repeal of the IRS rule is a BIG win. So that’s it! This progress provides momentum for continued discussion between the industry and regulators.
